MARC has placed its A+ID rating on ARL Power Sdn Bhd’s (ARLP) RM177 million Al Bai’ Bithaman Ajil Secured Serial (ABBA) Bonds and RM50 million Islamic Medium Term Notes (IMTN) on MARCWatch Developing. The rating action follows an early redemption of outstanding ABBA bonds and IMTNs by the issuer. MARC has received confirmation from Malaysian Trustees Berhad (the trustee) on receipt of payments on December 16, 2009. However, final cancellation of rated facilities is subject to the completion and perfection of discharge of security created under the facilities, which includes a charge on certain land in Sabah, amongst others.

The facility agent, MIDF Amanah Investment Bank Berhad, has informed MARC that while the process of discharging the charge over the land in question has commenced, it has yet to be perfected. At the date of this announcement, there are no indications to suggest that the discharge of the charge on the land will not in due time be perfected. In the event that discharge of charge is unsuccessful, the IMTN and ABBA bond holders have undertaken to refund the monies received.

ARLP owns and operates a 50MW (gross output) medium fuel oil fired independent power plant in Melawa, Kota Kinabalu, Sabah. The Melawa power plant consists of four 12.5MW (gross) medium speed diesel generating sets. The plant has capabilities to run on medium fuel oil, distillate fuel or a blend of diesel and palm olein. ARLP's power generation capacity is small at about 5% as a proportion of total net generation capacity generated by the Sabah Electricity Sdn Bhd (SESB), an 80%-owned subsidiary of Tenaga Nasional Berhad (TNB), and other independent power producers (IPP). IPPs collectively generate about 55% of power supply in Sabah whilst SESB produces the remaining.

MARC expects to resolve the MARCWatch Developing placement and withdraw its last assigned rating on ARLP upon the completion and perfection of the discharge of the collateral securing the rated facilities.

Contacts:
Sandeep Bhattacharya 03-2090 2247 / sandeep@marc.com.my;
Khairul Emran bin Mahmud 03-2090 2278 / emran@marc.com.my;
Ezien Hoo 03-2090 2267 / ezien@marc.com.my